Facebook to Test PayPal Competitor for Mobile Payments

Facebook is boosting its mobile presence as much as possible. The company recently acquired the company behind Jibbigo, a translation application, partnered with OpenTable for reservations direct from the social network and launched a VIP service similar to Klout. Now it’s adding something new, according to a report published by AllThingsD on Thursday.

The company is working to launch a competitor to PayPal, which will allow you to make mobile payments from your phone. Our guess is that this could be used in your newsfeed: if you see a deal pass by, you can quickly pay for the product using a payment option that’s tied to your bank account through Facebook. Just like with OpenTable, Facebook would keep you inside the social network so that you never leave. In addition, it will likely take a percentage of each sale, again helping it boost its mobile revenues.

Facebook has reportedly already partnered with JackThreads. So, for example, if you see a new pair of shoes cruise through your feed you can quickly tap purchase and buy the shoes without ever leaving Facebook. The payments could be used with thousands of partners; imaging buying a deal on coffee at Starbucks, or taking advantage of a sale at Gap. PayPal is already on the defensive, stating that it has a “great relationship with Facebook” and that it welcomes competition and is “looking forward to seeing what Facebook will announce.” We wonder how positive those statements will be if Facebook does indeed launch something that eats PayPal’s pie.

Some analysts are skeptical, though, and think PayPal will have the upper hand because customers already trust the payment service, which launched in 2006. “Nobody trusts social networks with their financial information, and they are certainly not going to trust Facebook,” one analyst told AllThingsD. “Maybe they have a few million people that have bought something on things like FarmVille, but that does not a network make.” We’ll see – Facebook’s customers already trust the social network with nearly ever other aspect of their lives.